Job releveling at acquired company
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How have you dealt with job releveling when acquiring a smaller company? Sometimes employees at smaller companies come with inflated titles and there is the need to level them appropriately in the bigger company (this might come with pay cuts). What’s a tactful and professional way to do so and when?
This is actually happening right now. You have to be respectful. I tell them, “This isn’t about you personally. It’s about aligning titles and scope across the company so we can grow together.” If there’s a pay impact, I don’t dodge it—but I’m transparent, and I offer a path forward. People can handle hard news when they feel seen and respected.
This is such an interesting topic. My organization is exclusively acquiring in the small to mid-size business market and we frequently find teams where there is a VP of Sales or similar, but that person is operating in an equivalent role to an Account Manager in our (somewhat) larger company. Our People and Learning team have the conversations about leveling as part of the proforma offer letter process. Our execs also have discussions about the roles and titles pre-close.
One thing that has been effective for us is completing a comprehensive compensation analysis and ensuring that even if the title changes, the compensation received in their new role is no less than what they were receiving previously. Preferably more/better! There have been one or two employees that pushed back even knowing they have the same or better comp but at least in my recent experience, those are the same people that wouldn’t have been happy even if you left them with their title. They don’t want to move to a bigger organization regardless.
This is something we look at during diligence. Many of the smaller companies we are acquiring have larger titles for their employees than they should. The pay range is typically equivalent to our lower level titles and the job duties typically align to a lower level as well. As we due diligence we look for the senior Director and above titles and specifically ask to see the job descriptions for these individuals. We evaluate the jobs one-by-one to see if it will align with our structure, most times it will not.
As part of the deal we will call-out these individuals will receive a different title or pay structure – especially in Sales. We will have the discussions with the M&A Deal team who has the discussion with the owners prior to the deal close to gather feedback on how they believe the employee will react to the new structure. Basically leaving the conversation to the former owner unless they want our HR team to be involved in the discussions.
Timing is extremely important for “releveling”. In my experience waiting a couple of weeks (usually between 12- 15 weeks) to understand the roles & responsibilities of acquired employees, leads to more effective “releveling” post-close. I faced situations, in which employee level were decided pre-close, and made it much more difficult to re-align levels post-close.
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